Of Interest

Why do you read EphBlog? Perhaps because only EphBlog brings you the juicy news contained in Williams’ filings with the IRS. Here is the latest Form 990. Comments:

1) Previous discussion here. Note also this handy summary in Willipedia. (I can no longer edit Willipedia. Perhaps someone could upload this latest form and then update the Willipedia entry accordingly. Future historians will thank you!)

2) I half-heartedly tried to get pre-1998 copies of Form 990 from the College a few years ago. I was told that they were not available. True? I have my doubts. Bureaucracies keep things. The College had to file this form with the IRS in 1997, 1996 and so on. Were all copies destroyed? Finding out and poking around through old data would make for an interesting Record article.

3) Too lazy to open up the 25 page pdf and look for the good stuff? I am here to help. The best paid professors are listed on page 7:

Professor Goethals is no longer at Williams, but has often been one of the highest paid profs. In the 1999 form (pdf), his total pay is $177,000. Does the increase over the last 6 years provides a good estimate of the standard raises that Williams has given to all its faculty, i.e., that Goethals did not get any special salary increases in this time? Perhaps. That would suggest that the annual salary increase has been about 2.8% per year, which seems too low.

4) The two biggest investment firms listed among the highest paid outside contractors are John W. Bristol and Hintz, Holman & Heckscher. Does anyone know much about these firms? What do they do for the College? I am perplexed. The College appears to pay them $2 million in total. That seems like an absurdly small amount. One guess is that they don’t do much for Williams (run index-like funds?) and, therefore, get the market wage. Another is that they are actually paid much more but since the money comes directly from the endowment, the College does not report it. That seems sleazy and, therefore, unlikely.

5) Morty’s salary and benefits are $479,000, up from $354,000 his first year. Was Morty 35% more productive/efficient in 2005 compared to 2001? Perhaps! At this rate of growth, the Williams President will be earning $1,000,000 in 2019. What would President Jack Sawyer ’39 say? Classic rant here — one of my all-time favorite posts.

1) I think that Ronit is correct. Note that Bristol is, I think, an equity shop and the College listed (page 23) $500m in equities. Bristol was paid $1.3m, or about 26 bps, a low but not unreasonable fee for a long-only institutional equity portfolio. I wonder if Bristol is paid a fixed and performance fee. I wonder what its benchmark is. Bristol seems to have been a manager of the endowment for many years. Note that its president, Charles Mott, is a former trustee.

As always, I don’t suspect that anything is wrong/sleazy here but I would sleep more easily if the College were more transparent in its endowment management. It ought to, at least, provide a list of its managers, the amounts entrusted to them and the benchmarks they are matched against. (Whether or not the College should also publish their fees and performances is a tougher question.)

2) The College has about $125m in bonds. Is HH&H a bond shop? I can’t find out much about them. If so, then their fee of $500,000 would be 40 bps. Seems high to be the fixed fee, but I don’t know much about pricing in this part of the market. Perhaps that included a performance fee of some kind?

3) Note that there are $600m (at year end) in “Privately Held Partnerships.” This is almost certainly hedge funds, venture capital, private equity and so on. Doesn’t the College pay them? Such funds would often have a 2 and 20 fee structure (2% fixed fee each year and 20% of any profits), although a place like Williams might get away with paying more like 1 and 10. So, even if it is 1 and 10, the College should have paid $6 million to someone this year. Why isn’t that amount reported?

It could be that there are so many small holdings in this category that no individual fund charged the College enough to be in the top 5 of outside contractors. Or it could be that the College does not report these amounts because they aren’t paid in the same direct fashion that Bristol and HH&H are paid.

4) How does an FOIA request help? I do not think that Williams is, itself, subject to FOIA. I called some IRS office a few years ago and was told that they don’t have available records going back more than 3 years. But suggestions are welcome! I have three Williams students coming to work for me as interns this summer and would be happy to let them spend time researching this.

5) I bet that no one at Williams is notified when anyone requests these records. They have better things to do.

I would bet the 2 and 20 is taken straight out of Williams’ assets, and is therefore not reported as a separate check that Williams would have to write.

The two shops you mentioned are upstanding in that they seem to charge an explicit fixed fee for their services, which I believe is not the case at many hedge funds. But David would know better than I – do hedge funds typically send a separate invoice in for their fees (not to mention the magic money-sink known as ‘soft dollars’), or do they come straight out of client assets?

The former trustee connection bothers me. He may be highly competent, but I’d much rather see that Williams pays no attention whatsoever to alumni or trustee connections when picking investment managers.

According to a longer conversation with a “Betty” in San Jose (who I needed to call at this time of the year anyway), the IRS is currently in the process of converting its long-term archives from paper to microfiche and disk “to catch up with expectations in other enterprises.”

You can file a request for any year’s 990 on Form 4506-A and, within mere weeks, should get a reply telling you if the IRS can currently produce the document and, should the answer be “no,” you can additionally file to find out when the document might be available or use a more formal FOIA method to try to locate the document.

There is also a private company (which I will not name) which, for a fee, provides access to 990s online, presumably, from the copies the IRS already has “on disk.”

It seems reasonable to assume that this company, like others in its sector, is highly sensitive to marketing the “secondary” data access to its materials produces– and, in fact, a good bet that the company in question produces more revenue from that information than from what it “seems” to offer, online.

On the other side of that economic flow, a good deal of corporations operating in the public domain are, shall we say, highly sensitive to people digging into their public filings, and prefer to be provided with a little notice when people go fishing.

Or to summarize a conversation from a few weeks ago, “if the — had any teeth these days, half the stuff there would be dangerous.”

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